Analysis of Magnit

Company: Magnit

ISIN US55953Q2021 | WKN A0MVY2

Business: A Russian retail chain that are being called the Wal-Mart (see analysis of Wal-Mart) of Russia and is currently the largest retail chain since it went passed the X5. The have four store formats convenience store (8143 of them), hypermarket (181 of them), "Magnit Family" stores (76 of them) and cosmetics stores (1000 of them). From what I have understood then each new built store is paid back in full after 3 years and to protect themselves against corruption they perform lie-detector tests on employees.

Active: Russia, mainly in the western parts but growing quickly towards the east.

P/E: 31.6 (crazy high for a Russian company today!)

Comment: The analysis is based on the equivalent of GDR stocks. One of the biggest investors, besides from the founder Sergey Nikolaevich Galitskiy with 40%, is OppenheimerFunds, Inc.

Disappointment as a customer and shareholder

Since I made my round of analysis of Russian companies I have been very interested in making an investment there. It did however encounter a couple of problems...

It did not appear to be easy to buy directly from the Russian market.
Some Russian companies have ADRs (so buying in the US) but that causes double taxation of dividends.
Other companies had GDRs (often traded from London or Frankfurt) which will make dividend taxation easier but...
there were so many of them that were interesting and I simply ended up feeling too scared about stepping into a Russian company with a GDR.

I started thinking more and more about ETFs and after reading up on it, and especially on the two options that were being offered to me from Deutsche Bank since I am both a customer as well as a shareholder there, I found that I was still not satisfied concerning the costs and I therefore called them up.

Ovomaltine crunchy cream: it rings a bell...

Yesterday I received, due to an advertisement campaign, a 400 g jar of Ovomaltine crunchy cream. Directly when I got the jar I started digging in my brain. Where have I heard this before? Hmmm... it must be a large company... could it be Unilever? I then looked at the jar and it said Wander AG. Hmmm... I have never heard about that before so as soon as I had the chance to access internet (yes, I am actually so retarded that I do not even have internet on my "smartphone") I started digging.

To my great happiness it turns out that Ovomaltine belongs to Associated British Foods! I knew I had seen the brand before but it had just slipped out of my mind where that was.

As soon as I came home I spread it out on a piece of bread and it was fully ok. Similar to Nutella but still different. The normal, well known way, to consume Ovomaltine is as a chocolate drink. I do however see a couple of issues with this new product....

From what I could find the price was around 4€ per 400 g. That is twice the price you pay for a jar of Nutella so they have no chance to compete with the price.

Secondly the design of the jar and looks as if it was made by a five year old. Yes, I know Ovomaltine is an old brand but if you want to arrive with a new product, and new way of using the product then maybe it will be better to make a new design and it could be that one should even use a new brand name for the product.

Since they can not beat price against Nutella they should have gone after health or other aspects such as Bio or Energy or something due to the malt extract that they use as the base of the product.

As a good shareholder one should however always try to consume products made by the companies that you own. For this reason I will enjoy my jar of Ovomaltine crunchy spread and if I see it in the store at a discounted price then I will try to buy one.

Kernel report Q1 2015

This time Kernel arrived with the real first quarter report which does then not only contain volumes of sold products but instead it contains the revenue in USD. The amount of shares bought and sold in Kernel is low but still the share price jumped up by over 7% on the day of reporting. Was there then anything of interest in it?

Analysis of Celesio 2014

Company: Celesio

ISIN DE000CLS1001 | WKN CLS100

Business: A German wholesale and retail company that provides logistics and services to the pharmaceutical industry. Sadly enough there are very little to change for the text concerning Celesio. They themselves own 2,200 pharmacies, have an additional 4,300 as participants in brand schemes and are in total providing 65,000 pharmacies and hospitals with medication each day.

Active: They are only active in Europe and are present in 14 countries mainly northern Europe.

P/E: 34.3

How to give bonus to management and employees?

Lately I have been thinking a lot about bonuses. One reason for this was due to that I was standing in the crossroad having to decide to build up more cash in my own company and pay 30% taxes on the earnings or to pay out a Christmas bonus to myself and my employees. In the end I decided to pay out the Christmas bonus.

To pay out bonuses must be made more transparent than what it is today. If one employee does a good job but the rest of the company does not then sorry, no bonus for you. If you want a bonus then teach the others to do an equally good job as you did and then maybe we can start talking about a bonus payment, given that the company starts to make earnings that is. A company that does not increase the amount of coins at the bottom of the treasure chest are also not able to pay any bonus to any employee just as they should not be able to pay any dividends to the shareholders.

Asian Bamboo report Q3 2014

By the look of it, the final report for this round of quarters becomes my very own bamboo and property company. As of yet they have no property but as soon as they have sold off some more bamboo plantations and have managed to raise some more money then they will jump into the speculative property market in China. I am so thrilled about this! Nothing much happened with the share price due to the release of the report.

K+S report Q3 2014

Upon the publication of the report not that much happened with the share price from what I can remember. Since then there has however been a little jump upwards. Still... what was in the report?

E.On report Q3 2014

When this report arrived there were maybe 15 minutes of excitement and the share price increased a little but since then it has been down, down, down and just to make things crystal clear a fourth down is needed. Was then the response from the market justified?

Extra stock bought November 2014: Kernel

There is still no clear end to the trouble between Russia and Ukraine but happily at least the gas is flowing so that people will not have to freeze this winter.

The share price of Kernel is every now and then taking another nosedive and the volumes traded are low so the real price is difficult to say. As I mentioned in my Stocks of Interest: November 2014 report I found there to be two stocks of interest for me to invest in and one of those, Fugro, I have already increased in so for the extra stock I decided to buy Kernel.

This time I bought 180 shares for 1062.34 € which gave me a share price of 5.90 € including the fees. I now own 550 shares in Kernel with the average price, including fees of 8.52 € per share which means I managed to push down my price per share with almost 1.30 € per share.

Diluting my share price down as I now once again did will not make my investment become positive and one should use this kind of strategy very carefully. I have failed in the past with this strategy. As an example with Asian Bamboo and back then I bought more due to a stupid mechanical rule of buying when the share price dropped by -X%. Such rules should never be used. Please always take a look at the company.

Is the company still kind of healthy and doing well? Then additional investing is ok.
Is the company loosing money and are making idiotic changes? Then do not invest and even consider to sell directly!

To get a better feeling for what and how Kernel is doing please see analysis of Kernel 2014 and  if you want to take a look at my current Stock Portfolio then please click on that link. The portfolio will however not be fully updated until the end of the month.

Kernel operating report Q1 2015

My agricultural holding Kernel arrived with their operating report for the first quarter of 2015 and in my opinion the report was ok. The market did not react towards it and in the shadow of what is going on already in Ukraine those kind of reports matters very little as they also should. It is tragic to follow everything that is happening there. What was in it?

Pershing Square: William Ackman Q3 2014

Very low activity from William Ackman and Pershing Square this quarter. He did however bring in a new company in his stock portfolio which is interesting...

The new company is:

Zoetis - discovers, develops, manufactures and commercializes a diverse portfolio of animal health medicines and vaccines designed to meet the real-world needs of veterinarians and the livestock farmers and companion animal owners they support. I took a look at them and saw a P/E of over 40 which directly made me flinch.

Conclusion: The new vet and livestock medication company looks far to expensive for me and the addition to the Canadian Pac Ry Ltd was minimal to say the least. So based on this information I will neither sell or buy something.

Enel report Q3 2014

My Italian electricity company Enel arrived with their third quarter report for 2014 and like the rest of the business they are not doing too well. Even before this report the share price has been drifting downwards. What was then in it?

Greenlight Capital: David Einhorn Q3 2014

Greenlight Capital has as tradition holds had a quarter of high activity and once again they jumped back into a company that was sold off completely in Q2.

Several new additions were made:

Cez report Q3 2014

Cez arrived with their third quarter report and nothing much happened to the share price which is good news since the other electricity companies are getting pretty pounded at the moment... and what is worse is that the reason for the pounding in most cases are also correct. Still this is about Cez and here comes as follows...

Berkshire Hathaway: Warren Buffett Q3 2014

The activity has been fairly low and it is already known from the third quarter report from Berkshire Hathaway that they hold plenty of cash at hand for the future elephant as Warren likes to call it. To me there was one interesting thing that happened due to that I follow several blogs in Sweden.

One new company joined and that was:

Dalal Street: Mohnish Pabrai Q3 2014

Mohnish Pabrai has yet again been active with not only kicking out companies from his stock portfolio but he has even decreased some holdings and brought in a new one!

The new investment was:

WL Holdings Corp - I could not find any homepage so sorry no link to that and the text concerning the company comes from Google finance "WL Ross Holding Corp. is a blank check company. The Company is formed for the purpose of effecting a merger or other business combination with a target company. As of March 31, 2014, the Company had not identified any business operation. As of March 31, 2014, the Company had not generated any revenues."

For the previous summary on Dalal Street please click on Dalal Street: Mohnish Pabrai Q2 2014.

Conclusion: I am worried about Mr. Pabrai and this is not a joke. He jumps into Posco and then he starts to decrease his position a quarter later with around -5%. Jumping into a blank check company that were created in end of March 2014 is really odd. The investment was not large (less than 600,000 USD) but still it is the principle of jumping into new companies without any track record that worries me. How does that fit with his, at least what he claims, list of points that a company must fulfil before he invest. I doubt it fits or he is now using a newly written list... either way it makes me uncomfortable.

MüRe report Q3 2014

My oldest and also among my best holdings, Münchener Rückversicherung, arrived with their quarter three report. The market was disappointed since the share price was down by a bit more than -1% on the day of publication but that matters little to me. What was in the report?

Commerzbank report Q3 2014

Share price was up around 1.5% on the day of publishing but has been drifting downwards ever since and generally the German banks are still being, and justifiable so, treated poorly by the stock market. Oh, and the woman is still on her bicycle so the development speed for Commerzbank have still not increased beyond bicycle speed. Where is the Ferrari I wonder?

Stock bought November 2014: Fugro

The stock that I bought for November became Fugro. In comparison to that it was down below 10 € per share I got a really bad price on it which of course annoys me but on the other hand I was prepared to pay over 20 € per share not that many months ago so the price I ended up paying this time I should still be happy about.

I increased my holding with an additional 75 shares at a total price of 1121.65 € including fees which means that I currently have 120 shares at a total price of 2165.67 € and a per share price of 18.05 € including the fees.

As always this is a long term investment and I hope that I one day can receive the kind of dividends that they used to pay in the past because that would give a very nice interest rate.

To find out more about Fugro please visit analysis of Fugro and  if you want to take a look at my current Stock Portfolio then please click on that link. The portfolio will however not be fully updated until the end of the month.

Fugro operating report Q3 2014

Due to this operating report the share price dropped like a stone and Fugro was even below 10 € per share for a day or so. I am very annoyed that I did not manage to increase my position then... what was then in this report from the underworld?

Analysis of ABF 2014

Company: Associated British Foods

ISIN GB0006731235 | WKN 920876

Business: A British conglomerate with agriculture, agricultural products as well as retail. Currently they have five business segments: Sugar (the old cash cow with current difficulties generating 16% of revenue), Agriculture (10% of revenue), Retail (The fastest growing segment with the EU and soon US expansion of Primark generating 38% of revenue), Grocery (26% of revenue) and Ingredients (less than 10% of the revenue).

Active: Heavily in Europe with the UK and Ireland as home base. Retail is all over EU and will in 2015 expand into the US. They are also present in Australia with Bakery and Sugar is present in Africa as well as in China.

P/E: 30.8

ABF annual report 2014

The day of the announcement of the report the share price dropped a little bur the very next day it jumped up by almost 10%! 10%! have people gone mad I wonder?

The list is complete

It has been some hard work to do it but now the deed is finally done! All the companies that I have analysed can now be found on this list: All company analysis. There you will also find some companies that I did analyse but never wrote a formal report about. When that is the case then there will also be no link from the name of the company going back to the analysis of the company on the blog.

And I once again must bring up that please check the date of the analysis! If that date is too old in your opinion then please ask me for a new analysis so that I can update the data. I will as time goes try to update a couple of the companies that have had negative earnings. Especially if their share price have moved up since the latest analysis since that could indicate that the company have started to get back on their feet again and could potentially be an interesting investment.

I will of course also always keep looking for new investments and I will publish them as they arrive on my desk and I am as always happy about suggestions (if you have suggestions for stocks that I should analyse then please go to the Analysis Requests page.). 

On the agenda now for the next couple of weeks will be reports from the companies that I own. The start of that has as of yet not been very good so I hope that the future will hold a couple of gold coins among the rubble.